2023-12-14 10:38:41 ET
Piper Sandler said it is “incrementally more positive” on Foot Locker’s ( NYSE: FL ) margin expansion opportunity in 2024, upgraded rating on the footwear and sportswear retailer to Overweight.
Shares of the New York-based company, which has a market capitalization of over $2 billion, were up over 7% at $30.63 in morning trading on Thursday, its highest since May 18 this year.
The stock closed 4% higher the previous session.
“We have heard some early commentary that the lower income consumer may be beginning to recover from when spending was significantly pressured by inflation and lower stimulus given that unemployment is still low, and we are actually starting to see some deflation in certain categories including apparel which should be a tailwind for FL's customer,” said Piper Sandler analyst Abbie Zvejnieks.
The brokerage also raised price target on the stock to $33, implying an upside of about 16% to last close.
“Now that industry wide inventory levels should be healthier by the end of the year, we think FL can bring in newness and pivot the assortment to give consumers trending product from brands such as New Balance, Adidas, and Nike,” added Zvejnieks.
However, Seeking Alpha’s Quant rating and Wall Street analysts are cautious on the stock and rated it a Hold, while analysts from Seeking Alpha consider it a Sell. The stock is mostly dragged down for its growth and profitability prospect.
Earlier in November, the company said its quarterly revenue was down 8.6%,while comparable-store sales decreased by 8%, driven by ongoing consumer softness, changing vendor mix, and a 3% negative impact from the repositioning of Champs Sports.
Overall, the stock has lost over 17% since the start of the year.
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Piper Sandler positive on Foot Locker's margin expansion opportunity, upgrades to Overweight